Petroplus insolvency risks 900 UK jobs amid petrol shortage fears

More than 900 jobs at Petroplus's Coryton oil refinery in Essex and storage
site in Teesside hung in the balance on Tuesday after the Swiss company
defaulted on $1.75bn (£1.12bn) of debt and filed for insolvency.

The Coryton refinery in Essex, which supplies 20pc of fuel for the south-east, stopped sales with immediate effect on Monday afternoon.Photo: REUTERS

The UK government moved to calm fears of a fuel shortage on forecourts in London and the South East after the Coryton refinery, which supplies 20pc of fuel for the region, stopped sales with immediate effect on Monday afternoon.

Ministers said they were "confident" that motorists would not face disruption to forecourt supplies as petrol retailers found alternative sources of fuel.

PricewaterhouseCoopers (PwC) was appointed as administrator of Petroplus's UK unit and was in talks with the refinery's customers, including BP, which uses fuel from Coryton for 180 of its petrol stations, in an attempt to enable sales to resume. Production at the site, which processes 220,000 barrels of crude a day, is still ongoing.

About 500 employees and 350 contractors work at Coryton, while 60 people are employed at the Teesside site.

Steven Pearson, joint administrator at PwC, said: "Our immediate priority is to continue to operate the Coryton refinery and the Teesside storage business, without disruption while the financial position is clarified and restructuring options are explored. Over coming days we intend to commence discussions with a number of parties including customers, employees, the creditors and the Government to secure the future of the Coryton and Teesside sites."

The search for a buyer could be a long one, analysts believe, as the refining industry across Europe struggles with overcapacity and falling fuel demand. However, Mr Pearson said he had received expressions of interest in acquiring Coryton from half a dozen parties.

Charles Hendry, the Energy Minister, was optimistic about the prospects of the jobs at Coryton being saved, describing the refinery as "the brightest jewel in the crown of Petroplus". He said: "There's a very significant prospect of a new buyer being found to give the company future employment and prosperity."

Mr Hendry moved to reassure motorists there was "no shortage" in the fuel market, as there was spare capacity at other UK refineries and import capacity. He saw "no reason" why petrol prices should rise.

BP, which sold Coryton to Petroplus in 2006 for $1.4bn (£900m) and is the refinery's largest customer, was understood to have increased its supplies from other sites such as Essar's Stanlow refinery to help meet demand.

A BP spokesman said the company was "seeking clarification about the current situation at Petroplus" and "monitoring the situation extremely closely". He added: "There are no immediate supply issues across our retail network."

Petroplus owns five refineries in Europe and had already temporarily shut down sites in France, Belgium and Switzerland. The company has been battling for survival since late last year when its lenders froze a $1bn credit line. Talks with banks to restore credit failed.

Jean-Paul Vettier, Petroplus chief executive, said: "We have worked hard to avoid this outcome, but were ultimately not able to come to an agreement with our lenders to resolve these issues given the very tight and difficult European credit and refining markets."